Litigation hold notice to opposing party

When you’re under a duty to preserve, you need to act diligently and in good faith to make sure no potentially relevant information is destroyed. This information can come in different forms—from electronic data, to physical documents and tangible things—and be stored in multiple locations, such as email, desktop drives, portable devices, shared drives, tablets, smartphones, and document management systems, and also dusty drawers and archived folders. 

Nowadays, most of the potentially responsive information is electronically stored information or ESI. The most common way to locate potentially responsive ESI is through custodians, the individuals who personally possess the information. Examples of custodian data sources are: email, personal storage on hardware devices or cloud accounts, allocated storage, data storage, data associated with social networking sites used by the custodian, tablets, smartphones, or even private web-based email accounts.

However, non-custodian ESI is a critical type of ESI, as well. Examples of non-custodian data sources include: databases, cloud storage databases hosted by third parties, and shared network storage locations.

These are some of the most common types of ESI and their usual locations:

Users of corporate computers usually have emails stored on one or more email servers. These servers may be physical hardware managed by IT staff, but more often than not they live on virtual servers leased from a cloud provider, like Microsoft Exchange. A third potential source is a Software as a Service (SaaS) offering from a cloud provider, which are ubiquitous. Webmail may be as simple as a single user’s Gmail account or, like the Microsoft 365 product, a complete replication of an enterprise email environment. On desktops and laptops, email is found locally (on the user’s hard drive) in container files with the file extensions .pst and .ost for Microsoft Outlook users or .nsf for Lotus Notes users, for example. Each user may be expected to have a substantial volume of archived email spread across several on- and offline sources.

• Chats and instant messages
  

Chat data from applications like Slack, Google Chat or Microsoft Teams has turned into a highly relevant source of ESI, especially as more teams turn to remote work, where once in-person conversations now take place over collaboration apps. These tools usually come with preservation and exporting features, so the biggest challenge with this type of ESI usually lies in the review process. 

• Word-processed documents, spreadsheets, and presentations
  

Custodians generate a lot of content in the form of productivity documents like Microsoft Word documents, Excel spreadsheets, PowerPoint presentations, and the like. These may be stored locally, i.e., in a folder on the C: or D: drive of the user’s computer or in an area reserved to them on a network file server and mapped to a drive letter on the user's local machine. The user sees a lettered drive indistinguishable from a local drive, but on the latter, all data resides on a server, where it can be regularly backed up. This is called the user's network share or file share.

‍However, thanks to cloud services like Google Workspace or Microsoft 365, productivity documents can also be created and stored online, where they’re usually accessible through the built-in preservation tools of these services like Google Vault. 

Data generated in social networking sites like Facebook, Twitter, Instagram has turned into a critical source of potentially relevant ESI. With more than 1.28 billion people logging into Facebook alone every day, the amount of data produced in the more than 150 social networking sites available is almost unmeasurable. For cases in areas such as insurance fraud, IP infringement, and even terrorism, social media evidence is playing a critical role today, so lawyers need to become familiar with best practices to preserve and collect social media evidence.

• Video, audio, and image files
  

Multimedia data has become a more relevant type of ESI in recent years. Similar to word-processed documents, it can be found in a wide variety of sources, from local storage locations like hard drives or local folders, to cloud locations, like Dropbox or Google Drive, and even on social media sites, like YouTube or TikTok. 

Other relevant types and locations of ESI include:

• Online banking, credit card, and other relevant account records.

• Accounting application data, often found in applications like QuickBooks, NetSuite, Sage, etc.

• Databases (e.g., Access, Oracle, SQL Server data, SAP.)

• Contact and Customer Relationship Management (CRM) data (stored in software like Salesforce, Outlook, MS Dynamics.)

• Calendar, journaling and diary application data (found in Outlook PST, Google Calendar, blog posts, etc.)

• Online access data like browsing history and other online activity logs.

Cases are decided on evidence. As succinctly put by one federal judge in a simpler era long before electronic communication and digital data storage, “Each litigant is entitled to every man’s evidence.” A litigation hold—communication putting the recipient on notice to preserve evidence—is a tool for preserving evidence that might otherwise be lost or destroyed.

In Wal-Mart Stores, Inc. v. Johnson (a spoliation case involving falling reindeer), the Texas Supreme Court wrote, “we begin and end our analysis here with the issue of duty, the initial inquiry for any complaint of discovery abuse. Before any failure to produce material evidence may be viewed as discovery abuse, the opposing party must establish that the non-producing party had a duty to preserve the evidence in question.” Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718, 722 (Tex. 2003). The duty, the court said, “arises only when a party knows or reasonably should know that there is a substantial chance that a claim will be filed and that evidence in its possession or control will be material and relevant to that claim.” Id.; see also Trevino v. Ortega, 969 S.W.2d 950, 953, et seq. (Tex. 1998) Baker, J., concurring (discussing the duty to preserve evidence).

When this common law duty arises always will be case specific. Generally, the duty may have ripened long before attorneys are hired and litigation commenced. Nevertheless, an early and well-crafted litigation hold letter can establish the point after which the existence of a duty to preserve will be difficult to challenge.

What should a litigation hold letter cover?

Essentially, a litigation hold letter alerts the recipient that it must identify, locate, and preserve relevant information. While the particulars of any litigation hold letter should reflect specifics of the case, the scope is coextensive with the limits of discovery. Texas Rule 192.3 defines the “Scope of Discovery” as including “any matter that is not privileged and is relevant to the subject matter of the pending action ….” Tex. R. Civ. P. 192.3 (a). Admissibility at trial is not the standard. Rather, “if the information sought appears reasonably calculated to lead to the discovery of admissible evidence,” it is discoverable. Id. Paragraphs (b) through (j) of Rule 192.3 outline the categories within which “matter[s]” that are within the scope of discovery might fall. Id. Because the litigation hold letter is a discovery tool, questions of admissibility are, at best, secondary. Relevance is the touchstone together with the concept that material or information to be preserved “appears reasonably calculated to lead to the discovery of admissible evidence.”

Pertinent to the digital nature of much of today’s information—often the type of information a litigation hold letter is intended to reach—comment 2 following Rule 192.7 is instructive. “The definition of documents and tangible things has been revised to clarify that things relevant to the subject matter of the action are within the scope of discovery regardless of their form.” Tex. R. Civ. P. 192.7, comment 2. Where the “form” is “electronic or magnetic,” Rule 196.4 provides that, “[t]o obtain discovery of data or information that exists in electronic or magnetic form, the requesting party must specifically request production of electronic or magnetic data and specify the form in which the requesting party wants it produced.” Tex. R. Civ. P. 196.4. It follows that a well-crafted litigation hold letter, likewise, should identify electronic and magnetic media and “specify the form” in which the data should be preserved. See In re Weekley Homes, L.P., 295 S.W.3d 309, 313-23 (Tex. 2009) (discussing specificity, what constitutes responsive electronic information that is “reasonably available to the responding party in its ordinary course of business,” and summarizing “proper procedure under Rule 196.4”).

Who needs to know about and comply with a litigation hold letter?

When sending a litigation hold letter, one may or may not (for practical or strategic reasons) choose to specify with whom it should be shared. The letter may be general—sent to opposing counsel if litigation has begun; to the person or entity on the other side of the controversy if no suit has been filed—with the expectation that the recipient will convey the message to preserve evidence. Or, in some cases, the sender may choose to be quite specific and identify by name, position, or relationship others to whom the recipient should forward the letter. In every case, the litigation hold letter should identify the sender and her or his relationship to the party on whose behalf the litigation hold is requested. The letter should sufficiently describe the dispute/event/incident in issue so as to avoid confusion about what must be preserved, that is, what the sender considers relevant. The letter should clearly state that the recipient has an obligation to take reasonable steps to comply and to preserve relevant information and materials including documents, tangible things, and data in any form.

On the other hand, once a litigation hold letter is received, there is little room to dispute that the “duty to preserve” has attached. That duty extends to the party or potential party (and counsel). See the frequently cited Zubulake line of cases from the Southern District of New York, Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) (Zubulake 1); 220 F.R.D. 212 (S.D.N.Y. 2003) (Zubulake IV); 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V). Specifically, in Zubulake V, the federal district court wrote: “Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents. Proper communication between a party and her lawyer will ensure (1) that all relevant information (or at least all sources of relevant information) is discovered, (2) that relevant information is retained on a continuing basis; and (3) that relevant non-privileged material is produced to the opposing party.” Zubulake V, 229 F.R.D. at 432. This duty may also extend to anyone identifiable as likely to have or have access to relevant information. See Tex. R. Civ. P. 194.2 (e); Fed. R. Civ. P. 26 (a)(1)(A)(i). For corporate entities this could include company officers, directors, employees (sometimes former employees), including key employees like the head of IT, the head of HR; anyone you, your adversary, or the court might deem a “key player” whether in connection with the facts in controversy, company operations, management, or systems. Persons familiar with any retention policies are particularly important. The duty to preserve is one of reasonable care and, once attached, extends to changing or suspending existing retention policies to preserve materials and information that would otherwise routinely be destroyed. See Adobe Land Corp. v. Griffin, L.L.C., 236 S.W.3d 351, 360 (Tex. App.—Fort Worth 2007, pet. denied) (citing Trevino v. Ortega, supra).

While the duty to preserve is not necessarily coextensive with an obligation to produce the material or information, a litigation hold letter is a powerful tool in the discovery arsenal. And, while the duty to preserve relevant evidence does not depend on sending or receiving a litigation hold letter, such a letter, especially in the era of electronic information storage, can be critical to proving your case or establishing a defense.

No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney.

If you have any questions or would like more information about litigation holds, please contact Michael Conner at 713.220.9162 or .